The balanced scorecard – making it public??
If you have studied management accounting, you’ll have heard the term balanced scorecard. A scorecard is a report of key performance indicators – both financial and non-financial – of an organisation. Many organisations not only use some form of scorecard, but also publish it on their websites or display it in a public place within the organisation.
Take for example London’s Heathrow airport. As you can see on the graphic here, they produce a monthly report (see here) which looks at many areas of performance for each terminal. Like many firms, they use a colour-coded system, where red usually means a target has not been achieved – for example, seat availability seems to be an issue in Terminal 3 on the example here.
This scorecard is a great example – if you click the link above you’ll see it has much more than I show here. I have only one negative thing to say about it – and this falls from a recent trip through Terminal 1. I discovered this wonderful colourful (and positive) scorecard on my way to the gents – on the corridor into the toilets to be specific. Surely there’s a better place to display results? Or maybe it does not matter as only us management accountants take any notice of such things.
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Where is the financial perspective? Do they display that too? Cause and effect relationships? Haven’t seen the full thing (the link doesn’t work), but the picture just shows a few customer and internal processes indicators based on customer ratings – is there more on the website?
Not much there on the financial perspective, juts rebates I think. The link is now fixed, so open any months file and scroll down a bit, maybe 3/4 pages.
I wonder whether they have a more detailed scorecard internally which shows the cause-and-effect relationships between the indicators. As it is, it looks more like an elaborate publicity stunt with a lot of green (“look how good we are”) and a little red (“we are not perfect, but we’re almost there”) to appease the investors.
Maybe we should contact the BAA for a closer look? 😉
The balanced scorecard is all well and good (and I am an ACA, so I studied this), but in the current economic climate – and in any climate for a PLC – cash is king and profits are the main target. I realise that improvements in the figures should lead to better profits (in the longer term), but if you offered the owners of Heathrow an improvement in their cleanliness score or profit, which do you think they would pick? They could have outstanding cleanliness now – just employ more cleaners – but this would reduce profits. They could have more seats by closing some of the shops, but this would too. The balance business scorecard is a ‘nice to have’; profit and cash are essential. That’s my view anyway.